Many business owners set up a limited company to work as a contractor or consultant. But what if things change? Maybe you’ve landed a full-time job and no longer need to invoice through your company. Instead of shutting it down straight away, you have a few options.
Let’s go through them step by step.
1. Make Your Company Dormant
If you think you might need your company again in the future, making it dormant is a simple and cost-effective solution. A dormant company is still legally registered but doesn’t trade or have any significant transactions.
Steps to Make Your Company Dormant:
- Tell HMRC – You need to inform HMRC that your company is now dormant for tax purposes. You can do this via your online HMRC account or by sending them a letter.
- File ‘Nil’ Accounts – You’ll still need to send annual accounts to Companies House, but these will be very simple.
- Submit a Confirmation Statement – This is a quick online form to confirm your company details once a year.
- Close Your PAYE Scheme (if applicable) – If you were paying yourself a salary, you need to let HMRC know you won’t be submitting payroll reports anymore.
- Cancel VAT Registration (if applicable) – If your company was VAT registered and won’t be trading, you should deregister.
- Cut Unnecessary Costs – Cancel business expenses like software subscriptions, office space, or insurance policies you no longer need.
2. Close the Company (Strike It Off)
If you’re sure you won’t need your company again, closing it down will save you time and hassle.
Steps to Close Your Company:
- Pay Off Any Debts – Make sure you settle any outstanding bills, including taxes.
- Withdraw Any Remaining Money – Transfer any leftover company funds to your personal account.
- Submit a DS01 Form – This is the official request to close your company, sent to Companies House.
- Inform HMRC – Let HMRC know you’re closing the company and deal with any final tax returns.
- Wait for Strike-Off Approval – If no one objects, your company will be dissolved after two months.
3. Keep It Open With Minimal Activity
Not quite ready to close it but don’t want the hassle of making it dormant? You can keep your company open and just do the bare minimum.
Things to Keep in Mind:
- Annual Accounts and Tax Returns – You’ll still need to file these, even if you’re barely trading.
- Business Bank Account – Some banks may close accounts if there’s no activity, so check with yours.
- Insurance and Compliance – If you offer services, you might still need professional insurance.
Which Option Works Best for You?
Here’s a quick guide to help you decide:
- Thinking about freelancing again later? → Dormant status is best.
- Certain you’ll never need the company again? → Close it and move on.
- Want to keep it open just in case? → Keep it active but limit trading.
Whatever you decide, make sure you keep HMRC and Companies House in the loop to avoid unnecessary fines or admin headaches. If you need help, we’re here to make the process easy for you.
Not sure what’s best for your situation? Get in touch with DNA Accountants, and we’ll help you find the right solution!